Pacun

I have noticed that most corporations have a payroll account and a checking account. If the corporation only issues payroll checks to 3 people, do you really need that payroll bank account? I believe it makes sense for a large C corporation to have more than one bank account, how many employees should the corporation have in order to start having 2 or more bank accounts?

I would check the adjusted basis right before remodeling (deducting depreciation). Then I would add the cost of remodeling. Next, I would compare the new adjusted basis of the house and the FMV and use the lower of the two and use 27.5 years. Since the house was taken out from the rental busines, I think the IRS wouldn't mind.

If the ONLY owner of the C corporation "borrowed" money from the company one year and then deposited it next year, what's the interest percentage the company should charge on this money? What if the owner decides at tax time not to repay this money but to have it as return of capital or dividends? I know that intent is important but this client moved from Sole proprietorship to C corporation and continue acting as a Sole Proprietor. He has stopped doing that after I talked to him but I am trying to correct the mistakes made in 2010 and early 2011.

As usually, you are right. My point is that when I go to a 3 day conference, my brain can only absorb so much in those 3 days. The conference is gone after those 3 days. This forum is here all year and little by little my brain absorbs much more. I think eveybody should have a SOLID conference materials. For Example, I went to a conference for the EA exam review. I got that solid material last year. Ever since, I have been watching what has changed and I keep my self up to date. If I have doubts, I go back to my materials.

I guesss your facebook contact is useless if you are making this comment.

That will be double dipping. You don't include your insurance premiums when you contribute pre-tax, correct? Similar situation.

I became EA On June 7th 2011. That event cost me more than $1,000 without considering opportunity cost. I had to pay for conference to review the EA exams, other materials, $100+ for each exam, $30 for the IRS, $64+ for the PTIN, etc). Now I have to pay for another conference to get my CPE credits for this year. To be honest with you, I learn more here in this forum than on any conference I attend, but that's another subject.

You can amend any year but if you want a refund, you are limited to three years after the due date. In your case, you are limited to three years after the due date (which is gone) OR 2 years after the tax is paid (this could be current).

On another posting we are discussing how the IRS will require exams, CPE credits, fingerprints and more. It is becoming expensive to prepare taxes and whoever has less than 50 clients, I think, will be driven out of business. I am an EA and this fall, I will send letters to some of my clients stating that their fees have double. That will give them a chance to look somewhere else and if they come back, they will pay the extra fee. These are clients that I have been charging too little or PITAs. I am also going to increase my fees a little bit to cover for the extra expenses I am incurring. Up to tax season 2009, the IRS fees for tax preparer were much less. Within a short period of time our fees to be a tax preparer have been raised significantly. If we are going to raised our fees, this coming season is the perfect time to do so. What are you planning to do this coming year?

Thank you for the clarification. It is true that if your employer runs certain type of business and you get discounts or free usage of your employer's services or product, you don't get tax on that benefit, ie, an airline who give free miles to its employees. I was referring to another type of benefit. An employer (not an airline) sends an employee to Europe for a month. The employee uses his personal credit to pay for food and to pay for the plane tickets from the USA and Europe and when he travels within Europe. The employee gets as a benefit for using his credit card a lot of miles for the travel and also for the amount spent on food. When the employee comes back he gets reimburse for hotel, food and incidentals. If the employee doesn't spend all the per diem money on food, he should have an entry on line 21 of his 1040. I think he also should have an entry on line 21, when he travels on vacation from Virginia to California using the miles he accummulate by using his credit card.

If you have a C corporation, you can create an accountable plan and get reimbursed from your employer. I thought your question was tacitly asking about the fact that you will get about 2K in personal benefits yearly when your business "accummulates" the miles. If there were 100% compliance, all employees who use their personal credit cards and get reimbursed by their employerr would have an entry on line 21 on form 1040 when they use the miles accummulated. A lot of federal, state and regular employees who travel for their employers would have an entry when they get reimbursement for food using the per diem method. Even, I bet you, some IRS employees who go to Atlanta for traning and get per diem for food and don't spend all the per diem in food DON'T have an entry on line 21. Also, employees with company's phones or blackberries would add to their return the cost of that phone call made to your office when they call their co-worker to plan their personal weekend events. Also, tax preparers would add as income all those personal phone calls made from the office phone which could be directly traced to personal. ALSO, the office computer would never be 100% business since since the tax preparer goes to the internet or email on the office PC for personal benefit. 100% compliance is very hard if not impossible. Yes, you can argue materiality in most cases.

You still have to report it because the IRS only knows that you got some profit based on the 1099-A. They do not know if that house was your primary residence or if the house was wiped by a tornado and your basis became 0 after the insurance company paid you (you could be selling only the land after the tornado). They also don't know how you put your hands on the house, etc.

I filed electronically at the end of March 2011 and I got a transcript in at the end of May 2011.

I would file Schedule C using a single member documentation from the state.

The first thing you need to find out is the basis of the house and why she sold/dispossed of it if she lived (as her primary residence) and owned it for less than 2 years within the last 5 years prior to the date on 1099-A. If she lived and owned it for at least 2 years of the last 5 years prior to selling/dispossing of it, she can exclude $250K of the profit or $500K depending on her filing status. If she depreciated the house and has a profit, you will need to recapture. If she has a loss, report the loss as personal loss and do not worry how long she lived there. Keep in mind that if she had 2 loans, you might be looking at the 1099-A for the bigger loan and the second loan could make her basis on the house more than $170k.

MD has some Art and Entertaiment districts. They are districts of several blocks and artist who live, produce and "sell" art or entertainment within the district are not taxed on that income at the state and city/county level. I believe a lot of states have that kind of tax breaks. Does anyone (on this forums) keep records of those districts in case you have to prepare taxes for an artist who happens to live, produce and "sell" there? Are we expected to know all of that or expect that our client tells us "I am an artist and we live in an art and entertainment district"? Technically, someone who lives in an A&E district and teaches dance or music at home will not pay any state taxes.

If there is someone who practices 100% compliance where will you enter this on 1040. One noon in February, president Obama had a desire for a hamburger (seems personal to me), he jumped into his employer provided car and went to buy his lunch. This is what an article read: "Nestled at the corner of a strip mall at Margarita and Winchester roads, Five Guys Burgers and Fries is one of the Inland Empires more notable burger joints. The Virginia-based burger chain received instant national fame when President Barack Obama made a surprise visit to one shortly after taking office." Imagine for a moment that he was the president of a large company. Where would he report the mileage on his 1040? How about when the company gives you a car and you have to go to your office first? This is commuting miles to the employee. Does he needs to report those miles on his 1040? Remember that these employees have cars because they are employees.

If you have not passed the Enrolled Agent exams yet, you should do it now before the next cycle. There will be a big change on your assigned number. Currently the P stands for "Provisional". That will be true until you pass the exams. After you pass the exams, the P will stand for "Permanent".

When 1099-C arrives, you enter the information on Form 982. If it is their main home and no taxes should be owed because of that 1099-C.

My employer became public in 2002 and I was given 30 shares which later split. I have 60 shares and the company was purchased and it will be a private held company and the purchasing company will buy all shares. If I recall properly, the 30 share were added to my 401k plan but no FICA was taken from my paycheck. I believe we will get a check but I have not paid FICA taxes. Does anyone know the tax consequences if the company hands me a check? If the 401k administrator gets the check, they will reinvest it and nothing will hapen. How about when I take out my money from my 401k, will I have to pay FICA on that amount or is there something on the code that allow companies to give their employees initial shares and no one pays FICA?

According to this article, the owner can get reimbursed if the company is an S corportation... is there something similar if the entity is a C corporattion? "IRS regulation 1.62-2(d)(1) authorizes your S corporation to reimburse you for your employee expenses. The regulation identifies expenses appropriate for reimbursement as those found in Part VI, Subchapter B, Chapter 1 of the Internal Revenue Code. Section 179 expensing is one of the many expenses in this section of the law that is identified as appropriate for reimbursement. To make this work, you submit an expense report to your S corporation requesting reimbursement for your business expenses, including the $23,000 of section 179 expensing. You must also submit to your corporation a mileage log that supports your business use of this vehicle. Further, you must submit a mileage log for each of the next five years, as that is the time during which your corporation could suffer recapture if business use of the vehicle were to drop to 50% or less. The expense report and mileage log combination creates a tax-defined "accountable plan" that allows your corporation to deduct the expenses, and makes the reimbursements to you not taxable. Say you give your corporation a separate expense report just for the $23,000 section 179 expense. On the basis of this request and the information from your mileage logs, the corporation writes a check to you for $23,000. The corporation deducts the $23,000 as a section 179 expense as if it had purchased the SUV itself, subject to the rules that apply to the corporation for its expensing. In general, your agreement with the S corporation will be for the corporation to reimburse all your actual vehicle expenses. If recapture should occur, your agreement could require you to reimburse the corporation for the recapture amount. Requiring the reimbursement is the easy way to handle this."

Have you been to the IRS tax forum at the Hilton in Orlando? Have taken your family and have they visited Walt Disney while you were attending the conference? What other attractions are there? Do you learn a lot from that conference? I need my CPE credits. I think I need 12 (two per month since June 2011)

That should work too. The key here is to make sure the first year (oldest) works and then move on to the next.

I think you enter C under designation and you enter your EA number under "Jurisdiction (state) or identification".